This week´s lecture dealt with the roles of a sales person and it includes five aspects: long-term ally, business consultant, Strategic orchestrator, Consistent cultivator and Focused optimist. It followed by compairing with different sellting strategy. There are mainly three strategies have been introduced like consultative, transactional and relationship selling. However nowadays literatures and business researchers emphasised more about relationship marketing becasue 80% percent of profits come from 20% customers. By understanding the characteristics of the sales person, we followed by introducing managing the sales force and how to sucessfully manage the sales force. In B-2-B market, the distribution channel is critital for the company to sell their products, and some pros and cros of different channel has been discussed as well as how to select and amange the channels.

In Kotler.P and Keller.K (2006) Marketing Management book, Chapter managing the sales force has written almost the same thing as we covered in the lecture. There are altogether 5 aspects in managing the sales force that recruiting and selecting sales representatives, training sales representatives, supervising sales representatives, motivating sales representatives and evaluating sales representatives. Some strategies and analysis of managing the sales force in those steps respectively have been discussed too. Managing sales force is not new for me too, becasue I have learnt from some other lectures.

Reading chapter 7 of book“Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers” by Moore (1995) also included in this week´s blog. This chapter focused on the pricing and distribution in terms of marketing decisions. Channel design is first objective to establish and secure before setting the corporate objective and following by motivating the channel too. After setting the objective, the distributuion-orientation pricing seems to be next step and then customer-oriented distribution. In the structure of high-tech distribution subtitle, some popular used distribution channel like direct sales, two-tier retail, one-tier retail, internet retail, OME etc are among the popular ones. The purposes of optimizing channels vary, from dimand creators, fufillers, role in providing the whole product and potential for high volume. The right choice of distribution channel can be to use direct sales and support as a demand-creation chennels to penetrate the initial target segment and then become aware of the presence and leadership in order to chose the most efficient fulfillment. Several distributuion-oriented pricing are the most harsh choices for the management, customer-oriented pricing, vendor-oriented pricing and distribution-oriented pricing methods are introduced.

After reading those chapters of books and lecture notes, I come to ISG Technologies Inc. case. At the beginning it introducs the company and its products and the strategy of the company is to support the high R&D expenditure into innovated products by customer service. After employing new direct, Mike Hopkinson designed four different choices of strategies to save the company from the losing control of sales as re-educating the new sales force, developing relationships with major companies, foucsing a single exclusive alliance with partner company or enforce the companies own direct sales force.

In my opinion of a sales strategy, there is no fixed strategy which is right or wrong, the most important is to chose the correct one which is consisitant with the company´s overall strategy and adopt different methods to manage the sales force and chose the proper distribution channels. Finally the company needs to try to motivate them so as to achieve best performances.

—Fan

This week’s written materials handled many of the same issues that were discussed on the lecture. Kotler (2003), for instance, handles issues connected to designing and managing the sales force. Kotler’s text is logical and well-written, but I personally think that some of the issues discussed in the chapter might not be applicable to Finnish selling style or sales organizations. It would be interesting to read how the Finnish salespeople should be recruited, trained and compensated, since it is quite likely that the exact same things do not motivate the Finnish salespeople as do their American counterparts. The differences start already from the geographic structure and size of the domestic markets in Finland and the USA, and thus even the territory management has a whole different meaning in these two countries.

Chapter 7 in the book “Crossing the Chasm” (Moore 1999) and the ISG case shift the focus from managing the salespeople to managing the distribution channels. Moore introduces the pros and cons of different distribution channels in the software industry, including channels like direct sales, agency, original equipment manufacturers (OEMs), distributors and internet. The author suggests that software companies should always start with direct sales in order to create awareness and demand. Only after the demand has been created and the position in the market established, the company should consider using some other cheaper and more efficient distribution modes, which are better suited for reaching the mainstream customers. The newness of the software industry sets challenges to the manufacturing companies because most of their employees have technical background with little or no business experience. Thus, books like “Crossing the Chasm” are important, but I think they are in danger of being read only by the business students while the software engineers just concentrate on designing their software products with hopes of someone coming and buying them one day.

The ISG case offers a glimpse to a real-life case where the distributor does not perform the way it is expected to, and consequently holds back ISG‘s growth and profitability. The managing director of ISG technologies is in a tight spot since he needs to decide whether to continue the contract with the current poorly performing distributor, to find a new distributor or to establish own sales force in the US. All options have their pros and cons, but it is clear that things need to change and ISG can’t continue their relationship with the distributor unless their start putting much more effort on selling ISG’s products. It would have been interesting to read what the managing director decided in the end, but based on the case description I would say that it might be a good idea to look for another distributor or to drop the direct sales altogether and to seek closer cooperation with scanner companies, such as Philips. ISG technologies is clearly a R&D-oriented company and it might need to focus on its core competences instead of investing lots of resources in building a sales organization more or less from the scratch.

This 5th lecture concentrated on different roles of a sales person and also about different sales channels. We talked about whether sales orientation behavior is somewhat a characteristic that some people are born with or whether it is a learned way of behaving. I guess both aspects are right. Of course it makes it easier if you are sales oriented type of a person but even the best salespeople need some kind of learning in how to become professional seller. We also talked about managerial aspects regarding recruiting, training and managing the sales people and how sales people should be motivated and rewarded for their accomplishments. The lecture consisted of quite the same issues that I learned about during course Industrial Sales Management by Wesley Johnston so I was somewhat familiar with this topic. But I noticed, however, that the aspect on this lecture was far more applicable to Finnish style of sales management where as Mr. Johnston’s approach was quite US oriented and there were certain aspects that I felt not so usable here in Finland.

The first article to be read for this lecture was chapter 7 from the book Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers by Moore (1995). I glanced through the whole book since I found it quite interesting and actually I was able to use some of that information on the other course I am studying at the moment. This chapter talked about distribution and pricing and why both are important marketing decisions when dealing with new customers. Both factors were mentioned to be critical and that they must be planned and carried out correctly from the very beginning. The aim is to create customer-oriented distribution and a distribution-oriented pricing. The different distribution channels mentioned were direct sales, retail sales, industrial distributors, valued-added resellers (VARs), original equipment manufacturers (OEMs) and system integrators. The author also pointed out the different attitudes towards these channels. These channels must be carefully evaluated according to whether the channel has or will have a relationship with the target customer and whether the channel fits into the whole product mix. You don’t necessarily have to pick only one channel but you can combine different elements from these channels. Selecting the right channel is not the answer to all problems and a credible market positioning must also be carefully thought. When thinking of pricing, there are also different orientations and perspectives. First, customer-oriented pricing that is designed for different types of buyer psychographics (i.e. how price sensitive the buyer is), second is the vendor-orientated pricing (regarding internal issues such as cost structure) and the third aspect mentioned was the distribution-oriented pricing.

The second task was to read through the case ISG Technologies, Inc. by Johnston and Marshall (2003). I think there were several pages missing from the course handout. At least I got that feeling when reading it through and noticing that it didn’t quite get into the point how it ended. I don’t, therefore, have much to comment on this article. I tried to look for this book from the library but it was available only in Kajaani University library and it was not available for loaning at that moment, so I couldn’t double check whether the case actually continued or whether it was ment to end as it ended in the course handout.

The third task was to read chapter 21 in Kotler’s book Marketing Management (2003). This chapter deals with sales force management and especially recruiting, selecting, training, supervising, motivating and evaluating the sales force and also how salespeople can improve their skills in selling, negotiating and carrying on relationship marketing. Kotler’s theories go hand in hand with those introduced in the book Managing Salespeople – a relationship approach (1998) by Robert Hite and Wesley Johnston.

There is only one lecture left for this course and during that lecture mr. Marttila will come and talk about LK Products case a bit more. I am really looking forward to that. I must now start working on the group assignment so that it’s ready for the last lecture.

- Katariina

The fourth lecture handled the role and responsibilities of a sales manager. Sales manager has a demanding position between salespeople and higher management, and he/she needs to adopt a role of a coach, strategist and communicator simultaneously. Ultimately, however, the responsibility of the sales manager comes down to making sure that everything in the sales department works in a way that enables the customer expectations be fulfilled or even exceeded.

This week’s articles also dealt with the changing role of the salespeople and the sales management especially. Weltz and Bradford (1999) argue that traditionally the salespeople have had the role of production, sales or marketing, but nowadays the role is shifting towards partnering, meaning that the salespeople need to collaborate closely to their customers to build a value-creating win-win-relationship.  The authors emphasize that when focusing on long-term customer relationships, the salespeople need to develop knowledge, skills, and abilities (KSAs) for partnering and conflict management instead of focusing on short-term profit-maximization.

There are five different strategies for conflict management between the buyer and seller: avoidance, accommodation, confrontation, compromise and collaboration. An interesting point brought forward by the authors, is that compromise approach involves discussions about how to split the pie, resulting in a win-lose situation, whereas collaboration investigates opportunities for expanding the pie, resulting in a win-win situation. I personally would have thought that there is no such dramatic difference between these terms, but that cooperation also aims at win-win situation, not to win-lose situation. (Weltz & Bradford 1999.)

While the article written by Weltz and Bradford (1999) has a rather neutral approach to sales management, the article by Dubinsky (1999) is a much more provocative one, arguing that the reason for salesperson failure rests always ultimately with the sales management. The sales management are inclined to blame their subordinates for failure, although more attention should be paid to extra- or intra-organizational factors affecting the situation. First of all, the internal and external environments need to be analysed. External environment includes issues such as economic situation, market potential and competition. The management can’t affect these factors directly, but according to the author they should be able to coordinate and train their salespeople in accordance with the changing situations. Secondly, the sales management activities, including the territory design, salesperson selection, training, motivation, leadership and evaluation, naturally have a great impact on the salesperson performance.

Dubinsky (1999) has a rather black-and-white view on the roles and responsibilities of the salespeople vs. the sales management. At times it feels that he regards salespeople as some “brainless” lot of people, who are not able to (or even supposed to) take responsibility for their actions. The article has surely provoked much discussion and feedback in the academic and managerial literature so in that sense the author has certainly managed to make his point.

This 5th lecture consisted of areas of planning and organizing of sales and the roles and skills of sales managers. This was quite the same aspects than what I learnt last autumn during the course Industrial sales management by Wesley Johnston. I find this stuff quite interesting since I used to work in a sales team and through that I got some kind of idea about how sales operations work in industrial setting and what kind of roles account managers and sales managers have (or should have).

The article Salesperson failure (Dubinsky, A. 1998) discusses about the usual areas in which salespeople often fail if the management of the salespeople is not functioning properly. The inefficiency is a result of several factors; internal or external environmental factors, poorly designed territory, a bad selection of sales people when thinking of physical and behavioral traits, lack of training, poor motivation of the salespeople, inefficient supervision and leadership skills of the managers, and problems in evaluating the performance of salespeople. It is a wonder that sales management issues still today are so little understood since sales function is what actually brings the money in for a company. I believe that majority of research and literature related to sales management aspects are written in American point of view and it would be interesting to know whether this information is applicable in international sales management issues. For instance incentive systems, I believe, are not applicable in the same format in every culture. And I believe also that the qualities of a sales manager are dependent on the culture in the question since the leadership skills may not be universal.

The article Personal Selling and Sales Management: A Relationship Marketing Perspective (Weitz, B. and Bradford, K. 1999) talks about the different areas of relationship marketing and how they have evolved towards the partnering era of marketing. They introduced the “Thomas’s five conflict management approaches” and its different ways of handling conflicts. This was quite an interesting article to read but it was a rather one-sided viewpoint in my opinion. I understand that partnering is indeed a great strategy and if it really works, it should be a win-win situation for both parties due to the mutual goals. But unfortunately, if your company is the only party that views the relationship as a partnering relationship but your customer views it as a “regular” relationship, there is hardly any win-win situation to happen. For example, the customer may view the supplier as a partner only in the early product development phase and take advantage of the supplier’s knowhow in R&D but when the production ramp-up for large volumes take place, the supplier involved in the early product development phase may not be involved anymore unless they can compete with price. And usually they won’t be selected as the main supplier in the production phase and they are simply forgotten after the initial start until there is a new product development case coming.

The Omni Automated Systems case was an interesting case and the main point was, in my opinion, that the sales person totally missed the point when it comes to the true needs and values of the customer. He did try his ultimate best, I believe, so the failure wasn’t due to the lack of trying but instead due to lack of understanding. And especially due to lack of understanding the buyer’s purchasing criteria and process. Perhaps his sales manager should have couched him more and also training could have been useful since the salesperson was not very familiar with this product line. His selling technique was relationship selling and it didn’t bring any results in this case. Perhaps value selling or consultative selling would have been more useful.

- Katariina

“Personal selling and sales management: A relationship marketing perspective” written by Weitz.B and Bradford.K, and the article “Salesperson Failure: Sales Management is the Key” of Alan J. Dubinsky both related to the lecture topic about the sales managers´ managerial skills and sales management.  Weitz.B and Bradford.k has argued the change of personal selling era from production, sales and  marketing role to partnering role that defines the salesperson are value creators and they are assigned to build a long-term seller-buyer relationships to generate more profit than just selling the products to the buyer. The autors from comflict management point of view to access and evaluate the relationships. Sales management in the partnering era suggests that the salespeople should organize the sales by customer and can make full use of sales teams. The required knowledge in this new era should be strategic to understand customer needs and the skills, abilities used by managers should be creative problem solving that resolving the conflict between channels and customers as well as building trusts and managing sales force. Finally some assessment of perfomance and rewarding methods are proposed by the autors to evaluate and motivate the sales force.

Dubinsky.A in salesperson failure case has observed that both external and internal environment can influence on the saleperson´s performance. The external factor including the heavy competition and economic downturns. The most important variables in internal environment which affect the sales perfomance are company reputation and the experience in the territory. Therefore, when managing salesforce, the sales managers should carefully desgin territories, selecting the sales people from physical, behavioral and psychological abilities, providing the supportive trainning, finally fairly evaluating the saleperson performance.

After knowledge of obtained through lecture and two articles about sales management, personal selling and sales managers´ skills, I started to analyse the case about “Omni Automated Systems” and tried to conclude that the salesperson misunderstood the meaning of personal selling and it heavily relied on the social relationship even without knowing the appropriate products the customer needed and his manager didn´t seem to be supportive when he wanted to talk with him. From the case I leant that the most critical issue is to understand the products which can offer to the right customers and the sales managers should have to suggest, proivde the guidences and resolve the problems confronted by the sales persons.

—Fan

Today there were 2 articles to read, here are the main points from both.

Ulkoniemi & Pekkarinen (2005) write about purchasing challenges that companies face when they are buying softaware companents. The former literature has paid attention to the close relationship between buyer and seller and cooperation between them. Software industry is one of the emerging idustries that is growing rapily, but which still lacks of buying models due to its immature.This makes it an interesting field of studies.

From the previous works it can be concluded that purchasing situation is modified accordingly, the swithibg costs are low and that adapting standard products may create indirect costs. In their research Ulkuniemi & Pekkarinen (2005) are able to conclude that supplier relationships in software industry are long-term, the relationship requires a lot of effort, there is a need for technical and purchasing competencies and that purchasing operations need to pay attention to the nature of both supply and demand.

Verville & Halingten (2002) go beyond the OBB (Organizational Buying Behavior) and focused on their research to the buying process itself and identified its major components. They study the ERP (Enterprice Resource Planning) which is one of the fastest growing segments in IT sector. Their results prove that acquisition of ERP is complex, involved demanding and intensive even though it is generally believed otherwise. They were also operating and making study in a matter that was and still is largely ignored. Even though there are already models, there has been a lack of research to extend and test these models. They conclude that there are six major processes in ERP software acquisition process (planning, information search, selection, evaluation, choice and negotiations) which are interrelated to each other.

All in all, buying processes are still widely ignored. They are time-consuming, complex and demanding and play a crucial area in companies. The software industry is growing rapidly which means that there is also a demand for models and guidelines which to use in buying processes.

Secondly, we got introduced to the importance of matching the sales process with the buyer’s buying decision process. We learnt that the consumer’s buying decision process differs considerably from the organizational buying decision process. The organizational buying process usually involves several different people and is tied to the business context and environment. Furthermore, the buying process can vary depending on the type and size of the buying organization, type of the product (mass product vs. highly customized product) and the type of purchase (ed. new buy, straight re-buy or modified re-buy). When it comes to planning the sales process, the seller needs to recognize that different customers have different purchase strategies. In an optimal case the sales strategy (product-based, solution-based or value-based) is chosen based on the buyer’s purchase needs and strategies.

The articles we needed to read this week also handle the buyer’s purchasing processes. The first article by Ulkuniemi and Pekkarinen (2005) deals with the management of supplier relationships in software component business. When buying software components, firms are usually looking for cost savings by outsourcing the components which are not part of the firm’s core competences. The fact is however, that the traditional purchasing models do not apply to the software component business as such because of the newness and immaturity of the industry. The authors point out that the supplier relationships in the context of software components are usually long-term, require a lot of managerial resources as well technical and purchasing competencies.

Verville and Halingten (2003) suggest a six-stage buying model of the buying process for ERP software. The stages involve planning, information search, selection, evaluations, negotiations and choice. The stages are constantly overlapping and the buying organization needs to go back and forth between the stages during the process. Interestingly, the model includes several similar issues presented in the article by Ulkuniemi and Pekkarinen, such as the long-term orientation and the need for multidisciplinary team. However, I think that the authors are presenting an oversimplified model which does not offer much help for the managers struggling with real-life purchasing issues. The model also ignores the importance of what happens after the choice has been made and negotiations concluded.

In my opinion the main point of the two articles is that purchasing is a complex function especially in quickly emerging and changing high-tech industries. We as possible future sales people need to understand that our customers might face great difficulties when trying to select the right suppliers. The salesperson’s job is to understand these concerns and try to find mutually satisfying solutions, especially if we are dealing with a long-term, value-seeking business relationship.